Share-based incentives have proven to be an effective means in both public and private corporations, large and small, to help boost employee retention, enhance motivation, engagement and productivity.<\/p>\n\n\n\n
Setting up and running an employee share plan does come with challenges however \u2013 one of which is administration.<\/p>\n\n\n
Share plan administration, commonly known as equity plan administration, is the process of creating, tracking and managing employee equity in a company. It involves input from internal and external parties.<\/p>\n\n\n
A share plan manager is typically required to understand the accounting, tax, legal, and securities regulations governing employee equity and other broad-based plans.<\/p>\n\n\n
\u201cEquity plan administration is a multifaceted process where admins are tasked with creating, tracking and managing the equity programs within a company. Research by the\u00a0NASPP and Deloitte Tax<\/a>\u00a0reveals that an average of five internal departments, and sometimes as many as nine or more, are involved in management of equity plans.<\/p>\n Stock plan administrators must be able to work cross departmentally with these stakeholders, including internal legal, finance and HR teams, and various external parties including law firms, brokers and tax professionals.<\/p>\n For this reason, administrators need a comprehensive understanding of\u00a0all relevant areas<\/a>\u00a0as they pertain to equity compensation to effectively administer their company\u2019s equity programs.\u201d<\/p>\n \u00a0\u2013 Jason Mann, CEP, Director of Content at NASPP<\/em><\/p>\n\n<\/div> \n\n According to a 2020 survey, over 70% of the companies<\/a> report that the primary responsibility for the administration of their share plan is housed within their HR or compensation & benefits department.<\/p>\n\n\n\n As mentioned already running an employee share plan requires a wide range of skills and knowledge, not all of which might be readily available within one department or even across your employee base. In a recent survey, we discovered that 63% of public companies choose to outsource all, or part of, their share plan management to a professional third party provider. <\/p>\n\n\n As you can see from the definition above, share plan administration is a complex process. Here, we break it down into ten major components: At J.P. Morgan Workplace Solutions, our Equity Intelligence team is made up of in-house lawyers, tax specialists and fully accredited stock plan professionals. Our team has helped clients launch and operate plans in more than 140 countries. Contact us to learn more about how to manage your administration challenges and reduce risk and engage your employees with equity rewards.<\/p>\n Speak with us<\/a><\/p>\n\n<\/div> \n\n Equity plan administration can be performed in-house, outsourced or both by:<\/p>\n\n\n An easy way to administer your plan is to leverage an experienced and professional share plan administration provider.<\/p>\n\n\n\n In large private companies, pre-public companies, and public companies, it\u2019s usual to see this function fully or partially outsourced. By bringing in a specialised\u00a0share plan provider<\/a>\u00a0like J.P. Morgan Workplace Solutions, you can focus on your core business while leveraging their experience and knowledge to ensure high-quality share-based incentive programs.<\/p>\n\n\n\nWhich team is responsible for share plan administration?<\/h2>\n \n\n\n
Let\u2019s break share plan management down<\/h2>\n \n\n\n
1. Gather all the necessary employee data<\/strong> to help figure out each eligibility, tax liability etc:
If you\u2019ve never launched a share plan, when you\u2019re gathering data from your participants, it\u2019s important to do it in an organised manner and in accordance with any data protection rules or guidelines. If are looking to switch equity plan providers, you will need to be careful that no data is lost during the data migration.
2. Have a plan for your share plans:<\/strong>
Companies could have multiple plans and awards running at the same time. Making sure vesting and termination rules, exercise windows, expiration dates, contribution limitations and other rules are correctly implemented for each plan and each individual grouping.
3. Tracking and processing day-to-day activities:<\/strong>
Enrolment, grant acceptance, vesting, exercise, historical issuances, termination and a lot more besides.
4. Taxation:<\/strong>
Calculating and withholding taxes as required, issuing and filing tax forms, and the requirement to stay compliant with local and international tax laws.
5. Accounting:<\/strong>
Recording and reporting equity compensation costs, updating valuations of equity, and again the requirement to stay compliant with accounting standards.
6. Dealing with multi-office locations:<\/strong>
A plan that works great for your Dublin office might not be suitable for the employees in your US branch. You may need to consider country-specific plans that may be more tax efficient than a global offering. You will also need to consider specifics around local cultures.
7. Handling reports:<\/strong>
Everything from processing transactions, contributions from salaries, taxes, payroll and so on.
8. Compliance in each jurisdiction<\/strong>:
You and your teams should regularly review and monitor regulations along with securities laws when not only designing a plan but also when administering the ongoing running of the plan.
9. Communicate<\/strong> with participants, internal and external parties at all stages, from inception and launch through to vesting and beyond.
10. Mobile workforce:<\/strong>
Communication and compliance get even more complicated when employees move across locations, e.g. a mistimed move may put your employees in a situation where they have to pay more tax or result in them no longer getting the benefits of a tax-favourable plan.
To learn more about these considerations, head over to our equity compensation management<\/a> guide.<\/p>\n\n\nWays to administer your share plan<\/h2>\n \n\n\n
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Pros & cons of using an employee share plan provider<\/h2>\n \n\n\n